Top Price Contributor Allegedly Leaned On Employees To Support PAC

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Jan 16, 2017

By Marisa Taylor and Christina Jewett

Kaiserhealthnews.org

President-elect Donald Trump’s Cabinet pick Tom Price counts among his top contributors a Georgia company and its CEO, who sent managers an email demanding donations “IMMEDIATELY” to a political action committee supportive of GOP candidates and causes, according to documents reviewed by Kaiser Health News.

The PAC was operated by Georgia-based MiMedx, whose CEO Parker H. “Pete” Petit is among the top individual contributors to Price, a Georgia congressman and Trump’s pick for Health and Human Services secretary. Federal campaign finance records show MiMedx, through its PAC, chief executive and his relatives, has contributed more than $40,000 to Price’s campaign and joint fundraising committees since 2014. With combined PAC and individual donations, the company was ranked as Price’s top contributor for 2015-2016 by the nonpartisan Center for Responsive Politics.

A spokesman for Trump’s transition said Price had no knowledge of “internal issues” at MiMedx. He acknowledged that Price has helped the company, which is based in his congressional district, but said he gave it no special treatment.

“Dr. Price assisted MiMedx in navigating regulatory waters, just as he would for any constituent,” said Phillip Blando, who did not elaborate on how Price helped the company.

Federal election law prohibits corporations from coercing employees to contribute to PACs.

The May 2015 email reviewed by KHN showed Petit demanding contributions from managers as the PAC was shaping its strategy with lawmakers.

“I’m going to ask one more time for our field management to send something to our PAC. And, IMMEDIATELY,” said the email sent under Petit’s name. “We have PAC business to transact, and we need at least 50 donors to do so.”

The same day the email was sent, text messages were sent out among some managers singling out certain employees who were expected to give.

MiMedx officials did not return calls or respond to detailed questions.

Experts in the law, who reviewed the email’s language at the request of KHN, said it could run afoul of legal restrictions on employer coercion.

The email arrived as Petit publicly pressed the Food and Drug Administration to change its stance on the regulation of MiMedx products, which could potentially affect the company’s bottom line or lead to a product recall. Petit, a prominent businessman in the Atlanta suburbs, served as a Trump campaign finance chair in Georgia.

Brett Kappel, a Washington, D.C. campaign finance lawyer who has represented both Democrats and Republicans, said Petit’s email would have to be reviewed by the Federal Election Commission for an official determination. But he said that “a complaint could be filed with the FEC alleging illegal coercion.”

In 2014, the MiMedx PAC was formed by the chief financial officer for the company, which makes controversial wound-healing products that are sold to Veterans Affairs hospitals or billed to Medicare. MiMedx told investors it built a business with $247 million in revenue in 2016 and a 86 percent gross profit margin by salvaging discarded placentas, fashioning them into skin grafts, paste or injections and selling them to wound- and burn-care physicians, as well as podiatrists.

The PAC contributed to a number of Republican causes and other members of Congress, according to a review of public records. Data from the Center for Responsive Politics show it gave $40,000 to the Trump Victory Fund and $30,000 to the National Republican Senatorial Committee.

The FDA declined to say whether it heard from Price about the company or to answer questions about its review of MiMedx products.

Price is scheduled to appear Wednesday before a key Senate health committee, but his formal confirmation hearing before the Senate Finance Committee has not been scheduled. Price is among the Trump Cabinet picks targeted by Democrats, and in recent days he has come under attack for his 2016 stock purchase at a discount price in a small Australian company that wants FDA approval for its multiple sclerosis drug.

In a statement issued to ethics officials in preparation for his confirmation hearing, Price has promised to divest himself of stock and recuse himself on matters in which he may have had a direct financial interest. As for how he will handle ethical questions involving former campaign contributors, Blando said Price “will be providing those views at his upcoming Senate confirmation hearings.”

Kappel said that the matter raises legitimate questions for Price. “Aside from the fact that he received campaign contributions from the same company, as the head of HHS he’s going to have oversight over the FDA and he should have a view on what are inappropriate interactions between regulated companies and the agency.”

In 2012, the FDA began to review whether liquefied tissue products made by MiMedx should be regulated more stringently.

A 2013 letter from the FDA questioning its products led to a decline in MiMedx’s stock price and to shareholder lawsuits. A case was settled in April for nearly $3 million.

The company continues to face uncertainty over “draft guidance” the FDA issued on tissue manipulation in 2015, potentially forcing the company to prove the effectiveness of its products or face tighter regulations.

The company says its growing enterprise, which has received a small amount of business from the federal agency Price would oversee, caters to an estimated 6.5 million Americans with chronic wounds.

Seeking to soothe investors’ concerns, Petit described his positive relationships with members of Congress during an October 2015 earnings call, according to a transcript.

“I have been personally involved,” he said. “I have walked the halls of Congress. [I have] been to FDA. I’ve [had] numerous conversations as well.”

Two former managers in interviews with KHN said they felt pushed to contribute or to nudge their subordinates into giving money to the PAC. The former managers asked to remain anonymous for fear of retaliation from the company.

On the same day the May 2015 email was sent under Petit’s name, another executive sent his own email to subordinates.

“So who hasn’t donated?” he wrote, according to a copy of the email reviewed by KHN.

Federal records show that dozens of company staffers make regular payroll-deduction contributions to the company PAC, ranging from $15 to $100 per week.

Experts said it’s unclear how the FEC would view MiMedx’s repeated requests to its employees.

Ellen Weintraub, a Democrat who serves on the FEC, said she couldn’t comment on the MiMedx matter, but is troubled by this gray area and voted in favor of investigating whether another company, Murray Energy, improperly pushed workers to support its political fund in an unrelated case.

“You go to work and you’re there to do the best job for your employer. You’re not there to support your boss’s political views,” Weintraub said.

MiMedx has cited help from other lawmakers in its dealings with regulators. In the November 2015 white paper, Petit directed investors to a letter that Rep. Tim Murphy, a Pennsylvania Republican, sent to the FDA. Murphy — a psychologist — served with Price on the House GOP Doctors Caucus. There is no record of donations to Murphy from the MiMedx PAC.

Murphy, chairman of a House subcommittee on oversight and investigations, sent a letter to the FDA outlining the woes of an unnamed company and pressed the FDA to answer questions about its use of “untitled letters” to raise questions about products. The FDA sent MiMedx such a letter in 2013.

Carly Atchison, a spokeswoman for Murphy, said lawmakers were raising concerns on behalf of “stakeholders” who complained “about inconsistencies across FDA centers,” an issue the agency she says later addressed. She declined to say whether the company referred to in the letter is MiMedx.

The company white paper also highlighted a May 2014 letter sent to then-FDA Commissioner Margaret Hamburg by several U.S. senators, who wrote to “express serious concern” about the agency’s use of draft guidance documents to explain policy. It did not name specific companies, but a MiMedx official spoke out during an FDA hearing last year on the draft guidance filings.

One senator who signed the 2014 letter was Georgia Republican Sen. Johnny Isakson, who will introduce Price at his confirmation hearing. Political funds benefiting Isakson since 2010 have received more than $47,000 from Petit, his family and the MiMedx PAC, campaign finance records show.

In the November 2015 white paper, MiMedx assured investors that “it is clear there is significant interest by Senators and Congressmen” in FDA regulations and “of the potential dire impact of regulatory changes without proper oversight.”

Isakson spokeswoman Amanda Maddox said the senator “has a long history of advocating for Georgians and Georgia companies that are seeking information from the federal government.” She did not elaborate or respond to detailed questions.